A Random Stroll Up to Wall Street

At the recommendation of my friend Bobby, I have started to read “A Random Walk Down Wall Street”.  This book is known as one of the premier investment books and a modern day classic.  I am slowly working my way through it, and I am sure you will hear me reference this book a lot as I read it.  However, today I wanted to share a simple tidbit from the first chapter.

The author, Burton Malkiel, references two different theories with regard to investing based on what the prospects of the future hold.  He calls these two theories, “The Firm Foundation Theory” and the “Castle-in-the-air Theory”.

The Firm Foundation Theory assumes that there is an intrinsic value for all stocks.  Something is either undervalued, overvalued, or at the right price.  Discovering what is undervalued or overvalued, and playing the market in the right direction until the stock reaches equilibrium is the way this theory works.  This also epitomizes the ‘buy and hold’ strategy of investing.  For example, lets assume Microsoft’s stock has been in the tank for some reason the past handful of months.  You know they will bounce back eventually; it’s only a matter of time.  So you buy the stock when it’s low, and hold onto it.  Eventually it will come back to its equilibrium value, and you made yourself a nice profit.  Warren Buffett is the perfect example of someone who has made billions using strategies similar to this.

Tickle Me Elmo Was The Hottest Toy of 1996

Tickle Me Elmo Was The Hottest Toy of 1996

The Castle-in-the-air Theory was put forth by legendary economist John Maynard Keynes.  In layman’s terms, Keynes felt that investors were better off and would rather catch trends on the upswing, and then sell their stake in the trend at its peak.  For example, if you bought a crate of Tickle Me Elmo’s back in the summer of 96 for $30 a piece, you could have bought yourself a couple of cars if you sold your stock in early December of 96.  However, if you bought that same crate of Elmo’s in late December, and held onto them until January, you stood to lose a lot of money.  The Castle-in-the-air theory takes advantage of trends.  If you get in on a hot stock before anyone else, and exit just as it’s starting to plateau or fall, you have done well.  This theory focuses on consumer psychology more than on actual valuation of stocks.

There will be more to come from this book, but these were interesting enough theories to share.  If you have read the book, or if you have other investing books to recommend, please leave a comment below.

4,972 Responses to A Random Stroll Up to Wall Street
  1. bunny sex toys
    January 19, 2019 | 2:31 pm

    below youll discover the link to some websites that we assume you’ll want to visit

  2. andy's company
    January 19, 2019 | 6:22 pm

    check beneath, are some totally unrelated websites to ours, even so, they’re most trustworthy sources that we use

  3. Phone Recycle
    January 20, 2019 | 1:12 am

    Thank you for your blog post.Really looking forward to read more. Really Cool.

  4. hand assembly
    January 20, 2019 | 2:27 am

    Sites of interest we have a link to

  5. Google
    January 20, 2019 | 7:55 am

    Here are a few of the internet sites we suggest for our visitors.

  6. Auto locksmiths
    January 20, 2019 | 5:47 pm

    please visit the websites we follow, including this 1, because it represents our picks through the web

  7. Edison Corella
    January 20, 2019 | 6:02 pm

    Aw, this was a really nice post. In idea I would like to put in writing like this additionally ? taking time and actual effort to make a very good article? but what can I say? I procrastinate alot and by no means seem to get something done. https://livebandtube.info

  8. using glass dildo
    January 20, 2019 | 8:43 pm

    the time to study or take a look at the content or web-sites we have linked to beneath the

  9. Utomhusbänkar
    January 21, 2019 | 12:01 am

    Thanks for the post admin, I like your blog.

  10. TANMATRA
    January 21, 2019 | 1:34 am

    Wow, great blog.Really looking forward to read more. Cool.

  11. Somebody essentially help to make severely posts I might state. That is the very first time I frequented your website page and thus far? I surprised with the analysis you made to create this particular post incredible. Wonderful task!

  12. top beginner dildo
    January 21, 2019 | 2:05 am

    Wonderful story, reckoned we could combine a handful of unrelated data, nonetheless seriously worth taking a appear, whoa did a single find out about Mid East has got a lot more problerms at the same time

  13. dogs food
    January 21, 2019 | 2:54 am

    Its like you read my mind! You seem to know a lot about this, like you wrote the book in it or something. I think that you could do with a few pics to drive the message home a little bit, but instead of that, this is wonderful blog. A fantastic read. I will certainly be back.

  14. sports games
    January 21, 2019 | 3:00 am

    I have been exploring for a little for any high-quality articles or blog posts in this kind of space . Exploring in Yahoo I ultimately stumbled upon this web site. Reading this information So i¡¦m satisfied to convey that I have an incredibly excellent uncanny feeling I found out just what I needed. I so much no doubt will make sure to do not fail to remember this website and give it a look regularly.

  15. Google
    January 21, 2019 | 3:59 am

    Very handful of web sites that come about to become in depth below, from our point of view are undoubtedly very well worth checking out.

  16. business opportunity
    January 21, 2019 | 6:31 am

    Sites of interest we’ve a link to

  17. sell
    January 21, 2019 | 7:35 am

    check beneath, are some completely unrelated internet sites to ours, nevertheless, they are most trustworthy sources that we use

  18. best g spot stimulator
    January 21, 2019 | 3:39 pm

    Major thankies for the blog article.Really looking forward to read more. Much obliged.

  19. g spot vibrator review
    January 21, 2019 | 11:45 pm

    Very informative blog article.Thanks Again. Keep writing.

  20. ایمپلنت
    January 22, 2019 | 1:03 am

    My spouse and i were quite contented when Ervin could round up his analysis out of the ideas he acquired through the web pages. It is now and again perplexing to just be giving out tips and hints that most people may have been making money from. And now we acknowledge we now have the blog owner to thank because of that. All of the explanations you have made, the easy blog menu, the friendships your site make it possible to foster – it’s most great, and it is making our son in addition to us do think this idea is amusing, and that’s really essential. Many thanks for all the pieces!

Trackbacks/Pingbacks
  1. Immigration policy 2019
  2. movers in Sharjah
Leave a Reply


Wanting to leave an <em>phasis on your comment?

Trackback URL http://mynextbuck.com/a-random-stroll-up-to-wall-street/trackback/

A Random Stroll Up to Wall Street

At the recommendation of my friend Bobby, I have started to read “A Random Walk Down Wall Street”.  This book is known as one of the premier investment books and a modern day classic.  I am slowly working my way through it, and I am sure you will hear me reference this book a lot as I read it.  However, today I wanted to share a simple tidbit from the first chapter.

The author, Burton Malkiel, references two different theories with regard to investing based on what the prospects of the future hold.  He calls these two theories, “The Firm Foundation Theory” and the “Castle-in-the-air Theory”.

The Firm Foundation Theory assumes that there is an intrinsic value for all stocks.  Something is either undervalued, overvalued, or at the right price.  Discovering what is undervalued or overvalued, and playing the market in the right direction until the stock reaches equilibrium is the way this theory works.  This also epitomizes the ‘buy and hold’ strategy of investing.  For example, lets assume Microsoft’s stock has been in the tank for some reason the past handful of months.  You know they will bounce back eventually; it’s only a matter of time.  So you buy the stock when it’s low, and hold onto it.  Eventually it will come back to its equilibrium value, and you made yourself a nice profit.  Warren Buffett is the perfect example of someone who has made billions using strategies similar to this.

Tickle Me Elmo Was The Hottest Toy of 1996

Tickle Me Elmo Was The Hottest Toy of 1996

The Castle-in-the-air Theory was put forth by legendary economist John Maynard Keynes.  In layman’s terms, Keynes felt that investors were better off and would rather catch trends on the upswing, and then sell their stake in the trend at its peak.  For example, if you bought a crate of Tickle Me Elmo’s back in the summer of 96 for $30 a piece, you could have bought yourself a couple of cars if you sold your stock in early December of 96.  However, if you bought that same crate of Elmo’s in late December, and held onto them until January, you stood to lose a lot of money.  The Castle-in-the-air theory takes advantage of trends.  If you get in on a hot stock before anyone else, and exit just as it’s starting to plateau or fall, you have done well.  This theory focuses on consumer psychology more than on actual valuation of stocks.

There will be more to come from this book, but these were interesting enough theories to share.  If you have read the book, or if you have other investing books to recommend, please leave a comment below.

4,972 Responses to A Random Stroll Up to Wall Street
  1. bunny sex toys
    January 19, 2019 | 2:31 pm

    below youll discover the link to some websites that we assume you’ll want to visit

  2. andy's company
    January 19, 2019 | 6:22 pm

    check beneath, are some totally unrelated websites to ours, even so, they’re most trustworthy sources that we use

  3. Phone Recycle
    January 20, 2019 | 1:12 am

    Thank you for your blog post.Really looking forward to read more. Really Cool.

  4. hand assembly
    January 20, 2019 | 2:27 am

    Sites of interest we have a link to

  5. Google
    January 20, 2019 | 7:55 am

    Here are a few of the internet sites we suggest for our visitors.

  6. Auto locksmiths
    January 20, 2019 | 5:47 pm

    please visit the websites we follow, including this 1, because it represents our picks through the web

  7. Edison Corella
    January 20, 2019 | 6:02 pm

    Aw, this was a really nice post. In idea I would like to put in writing like this additionally ? taking time and actual effort to make a very good article? but what can I say? I procrastinate alot and by no means seem to get something done. https://livebandtube.info

  8. using glass dildo
    January 20, 2019 | 8:43 pm

    the time to study or take a look at the content or web-sites we have linked to beneath the

  9. Utomhusbänkar
    January 21, 2019 | 12:01 am

    Thanks for the post admin, I like your blog.

  10. TANMATRA
    January 21, 2019 | 1:34 am

    Wow, great blog.Really looking forward to read more. Cool.

  11. Somebody essentially help to make severely posts I might state. That is the very first time I frequented your website page and thus far? I surprised with the analysis you made to create this particular post incredible. Wonderful task!

  12. top beginner dildo
    January 21, 2019 | 2:05 am

    Wonderful story, reckoned we could combine a handful of unrelated data, nonetheless seriously worth taking a appear, whoa did a single find out about Mid East has got a lot more problerms at the same time

  13. dogs food
    January 21, 2019 | 2:54 am

    Its like you read my mind! You seem to know a lot about this, like you wrote the book in it or something. I think that you could do with a few pics to drive the message home a little bit, but instead of that, this is wonderful blog. A fantastic read. I will certainly be back.

  14. sports games
    January 21, 2019 | 3:00 am

    I have been exploring for a little for any high-quality articles or blog posts in this kind of space . Exploring in Yahoo I ultimately stumbled upon this web site. Reading this information So i¡¦m satisfied to convey that I have an incredibly excellent uncanny feeling I found out just what I needed. I so much no doubt will make sure to do not fail to remember this website and give it a look regularly.

  15. Google
    January 21, 2019 | 3:59 am

    Very handful of web sites that come about to become in depth below, from our point of view are undoubtedly very well worth checking out.

  16. business opportunity
    January 21, 2019 | 6:31 am

    Sites of interest we’ve a link to

  17. sell
    January 21, 2019 | 7:35 am

    check beneath, are some completely unrelated internet sites to ours, nevertheless, they are most trustworthy sources that we use

  18. best g spot stimulator
    January 21, 2019 | 3:39 pm

    Major thankies for the blog article.Really looking forward to read more. Much obliged.

  19. g spot vibrator review
    January 21, 2019 | 11:45 pm

    Very informative blog article.Thanks Again. Keep writing.

  20. ایمپلنت
    January 22, 2019 | 1:03 am

    My spouse and i were quite contented when Ervin could round up his analysis out of the ideas he acquired through the web pages. It is now and again perplexing to just be giving out tips and hints that most people may have been making money from. And now we acknowledge we now have the blog owner to thank because of that. All of the explanations you have made, the easy blog menu, the friendships your site make it possible to foster – it’s most great, and it is making our son in addition to us do think this idea is amusing, and that’s really essential. Many thanks for all the pieces!

Trackbacks/Pingbacks
  1. Immigration policy 2019
  2. movers in Sharjah
Leave a Reply


Wanting to leave an <em>phasis on your comment?

Trackback URL http://mynextbuck.com/a-random-stroll-up-to-wall-street/trackback/